1. CNP532 - INNOVATION AND TECHNOLOGY MANAGEMENT
MICROSTILL PROJECT NATALIE THOMSEN – DAVID BULLARD – DENNIS LARACY – HAMISH PRESSLAND - TONY IGO
CASE STUDY
Managing innovation is quite different from managing operations as:
you always have less information available to make choices than you'd like
innovation has not a single goal, but multiple and unclear goals, and
each of these goals can be reached through multiple routes.
CNP532 - INNOVATION AND TECHNOLOGY MANAGEMENT
MICROSTILL PROJECT

2. “Every business needs one core business competency – innovation” P
“Every business needs one core business competency – innovation” P.Drucker
Is IOR’s management style suited to niche market creation ? Why ?
WHAT IS A NICHE MARKET?
A sector of a given market that can be defined with some precision, having customers that are accessible, offering potential for growth and is not owned by existing vendors – R.M.Beacker – 01/03
A focused, targetable portion of a market
NICHE MARKETING :-
LINE EXTENSION – basic product taking advantage of other market opportunities
HORIZONTAL INTEGRATION – applying basic resources to offer different services & products
VERTICAL INTEGRATION – new uses for individual components of existing services & products
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3. WHAT IS NEEDED TO OPERATE IN A NICHE MARKET ?
UNIQUE DISTINCTIVE COMPETENCE
PROPRIETARY TECHNOLOGY
CREATION OF DEFAULT “ BENCHMARK”
SPECIALISED MARKET KNOWLEDGE
“ – choosing a unique and reliable position that is rooted in systems of activity that are difficult for others to match “ MICHEAL PORTER
MICROSTILL PROJECT

4. WHAT IS THE IDEAL MANAGEMENT STYLE FOR NICHE MARKETS?
FLEXIBILITY & ABILITY TO REACT TO CHANGE
COMMITMENT TO ACHIEVE DECLARED OBJECTIVES
MANAGEMENT STRATEGY EMBRACES INNOVATION
CORPORATE STRUCTURE DESIGNED TO SUPPORT INNOVATION
EMPOWERED EMPLOYEES DRIVE INNOVATION
CROSS-FUNCTIONAL TEAMS DETERMINE ROUTE TO INNOVATION
WILLINGNESS TO EXPAND INTO OTHER RELATED NICHE MARKETS
MICROSTILL PROJECT

5. What does Arthur Nommensen mean by “rigid flexibility”?
MANAGEMENT STRATEGY - a unique combination of policies, practices, organization structures and the various systems to guide management and employee behaviour. - Scott Hollander
Rigid = manage a Requirer !
focuses on results, achievement, quality, accuracy, innovation, service and profitability.
Flexible = lead a Relater !
focuses on establishing good working relationships
“Neither type of manager is “ better” than the other. On the contrary, the best managers have the ability to do both well, and know when to choose one over the other !” Peter E. Friedes
MICROSTILL PROJECT

6. MANAGEMENT STYLE = The extent to which all members perceive they have encouragement or permission to use their own initiative in performing their assignments, feel free to try new things and question the status quo, and feel supported by management.
1. Organizational clarity--This is when there are clear goals as a result of a formal planning process. Planning is disseminated far down into the organization, and well-defined plans are shared.
2. Decision-making structures--Information is readily available and shared across the organization.
3. Organizational integration--There is a strong bias toward communication throughout and across all levels of the organization. Goals and expectations are clear. The impact of each unit on the work of the other units is understood and accepted.
MICROSTILL PROJECT

7. MICROSTILL PROJECT

8. What Has IOR Done to Develop Its Microstill Product
Customer Needs – Initially BP in Papua New Guinea, vary product for other customer needs.
Product Specification – Reflect customer need’s and IOR’s innovative approach.
Manufacturing, Installation and Commissioning- Suit customer requirements – complete unit transported, installed and commission generally in 6 weeks.
CUSTOMER DRIVEN
MICROSTILL PROJECT

9. What Methods Does IOR Use to Develop New Products and Processes?
Necessity – driven by budget constraints, eg $400k steel pipeline, developed plastic pipelene to spec $150k
Develop software in house – could have bought ‘off the shelf’. Nommensen says ‘Introduces another element of fun for designers’
Driven by constant R&D – constantly meeting and exceeding market needs by continuous improvement and innovation.
Advantage of being owner driven – allows testing and perfection before deployment.
Take advantage of Government tax breaks. 150% for identified R&D.
MICROSTILL PROJECT

10. Development of Micro-Refinery
Pre -1984
Issues relating to high transport costs involved with distributing petroleum fuels to inland farming and mining communities throughout Australia
The only sources of supply were coastal refineries in major cities – thousands of miles away
MICROSTILL PROJECT

11. Development of Micro-Refinery
Eromanga Small Scale oil refinery developed
Capable of 1500 barrels/day capacity
Small Scale refineries advantageous in remote areas where:
small demand for petroleum products
low level of infrastructure available
MICROSTILL PROJECT

12. Development of Micro-Refinery
Late 1980’s
Due to the success of the Eromanga project BP asked IOR to tender for a small refinery in Papua New-Guinea
IOR realised earlier on that event the small scale size would be too great a capacity and thus the MICROSTILL was born.
MICROSTILL PROJECT

13. Development of Micro-Refinery
IOR’s Microstill Development Process
Remote locations where crude oil is available and costs to transport fuel form large oil refineries prohibitive created the economy for the Microstill
Compact, easily transportable and could access almost inaccessible locations such as dense rainforest or deserts.
Reduce risk associated with fuel transportation to remote locations
MICROSTILL PROJECT

14. Effectiveness of Process
Relatively effective process
creating a new market by using an existing technology in an innovative way
Niche market created through doing what no-one else really wanted to do
Developed over a relatively short period of time
refinery capable of creating 1500 barrels/day
to producing 150 barrels/day
extremely mobile and cost benefit compared with transporting fuel
Don’t have have long term business or marketing plan
Need to specify market targets
MICROSTILL PROJECT

15. Niche Market Creation
Created multifunctional teams and avoided unnecessary specialisation
In-house development of process and product - more secure technology protection from rival companies
Developed using conventional techniques capable of producing more than one type of product
Developed a custom built compute software system – reduces possibility of reverse engineering
Large oil companies concentrate on the larger coastal markets and major refinery installations.
Combined with continuous incremental improvements
MICROSTILL PROJECT

16. How will they sustain their current leadership?
DIVERSIFICATION within their Niche Market
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17. How will they sustain their current leadership?
Mini Oil Refineries
“Turn Key” Company
Refining – Owner Operator
Process Engineering
MICROSTILL PROJECT

18. Mini Oil Refineries Expanding the niche market Continuous augmentation
Innovative
Progressive
Specialist
MICROSTILL PROJECT

19. “Turn Key” Company From order to commissioning: Design Procurement
Fabrication
Project management
Installation
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20. Owner Operator Refinery
Eromanga
All new technology tested on site
Insight into small remote refineries
Reliability proven in actual operation
Oilfield services
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21. Process Engineering Responsible for design and development
Provides contract engineering services to wider processing industry
Provides independent design certification and ratings for other manufacturers
MICROSTILL PROJECT

22. Is IOR likely to be challenged by market followers? WHY?
In house development of process and product technology
Harsh environments
Cost effectiveness of IORs services
Competitor failure
MICROSTILL PROJECT

23. The Russian Orders Microstills Project Management Plan
From an operational & processing context IOR positioned well financially, strategically and technically
Extensive Overseas 13 units sold only two in Australia
Corporate Monitoring during the international commissioning process
Bilingual computing systems software
Superb product
A commitment to quality and service
MICROSTILL PROJECT

24. The Russian Orders However!!!
From an holistic business and strategic management context they appear under prepared
They have by entered into the market by chance
MICROSTILL PROJECT

25. The Russian Orders Recommendations
Longer period of assimilation into the local culture
Engage with a local entity in the form of a contract Alliance or Partnering Agreement
Pre arranged financial mechanisms and guarantees
Preparation of a marketing strategy to investigate further opportunities
MICROSTILL PROJECT